In separate speeches, SEC Investor Advocate Rick A. Fleming and Division of Economic and Risk Analysis Deputy Director and Deputy Chief Economist Scott W. Bauguess described how the SEC might employ data analytics to improve disclosure and the value of research using big data.
Mr. Fleming identified "wish list" priorities for the SEC: (i) "embrace the Legal Entity Identifier with the goal of making public company disclosure to the SEC interoperable with disclosure to other reporting regimes," (ii) require the block-tagging of narrative text disclosures, and (iii) "require detail-tagging within narrative text disclosures." Mr. Fleming stated: "by prioritizing structured data, and particularly the tagging of text . . . the [SEC] could drive even greater innovation in cost-effective enhancements to the packaging and delivery of information." Mr. Fleming delivered his speech at the XBRL US Investor Forum 2016: "Finding Value with Smart Data."
Mr. Bauguess described the consequences of the "proliferation of analytical methods enabled by big data." He asserted that the rise of big data resulted in, among other things: (i) fewer limitations in the scope of potential empirical studies by researchers who have access to extensive computer resources; and (ii) an increase in the capacity to focus on assessing the robustness of the empirical methods that underlie the conclusions of studies. Despite these advances, Mr. Bauguess observed, human judgment "remains essential in making the output of [SEC] analytical models and methods actionable." Mr. Bauguess delivered his speech at the Midwest Regional Meeting of the American Accounting Association.
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